Back to the Data Model.
The Area being Modelled is :-
Manufacture of Earth Moving Equipment.
Specifications have been provided by Winston Kinyua in the following terms :-
Question: The Global Earth Moving Consulting Company
Customer Needs and Operational Performance
Specifications of User Requirements (SOUR) :-
Global Earth Moving is a producer of high-quality small earthmoving equipment used in the home
and in the small-business landscaping industry.
The company serves the international market, and one facility for manufacturing and
distribution of its products is located in Reno, Nevada.
The Company has limited space for production and storage of inventory.
Qualified personnel for production of premium small earthmoving equipment are in short supply,
and training requires 11 weeks.
The Company has introduced a new personal and small-business navigational device called the Ultramover,
which will sell for $129.95.
Based on the market research conducted by the Marketing and Sales Department, first-quarter sales are forecasted to be 10,000 units.
Here are the current revenue and cost structure for the ultraMover.
The company can produce 10,000 units per month by working two shifts per day, 5 days per week.
Adequate storage space for 10 days exists for raw materials, work-in-process, and finished goods to
support the forecasted 10,000 units sold per month.
Lead time for ordering and receiving required raw materials and component parts (Work-In-Progress) is
50 days, which includes 5 days for transit.
All raw materials and Work-In-Progress (WIP) come from small, specialized single source suppliers.
Production time requires 5 days, and transit time averages 3 days.
Production for the first quarter is scheduled to begin in 60 days.
All orders for raw materials and work-in-process for the entire quarter have been placed.
The marketing and sales Total Per Unit Manufacturing Costs $ 48.00
Distribution and Storage 22.00
Sales and Administrative 38.00
Price per Unit $ 129.95
All other cost categories equal $5 per unit, leaving a pretax profit of 13.04%.
The President and CEO of Global Earth is aware that the company needs expert assistance to get through this production challenge.
Assume that your team is a team of industry experts for a reputable consulting firm that has been brought
in to help solve the problem.
Analysis of the situation reveals that you can add a third shift and work all shifts 6 days per week to get
production up to 20,000 units per month.
You must also rent an off-site facility to achieve this level of production.
Initiation of this effort will increase total production costs by 62%.
Through your contacts in the manufacturing industry, you have located two small manufacturing companies
that can meet the 10,000 unit per month shortfall for the quarter.
Subcontractor A requires 45 days to ramp up for production with a total production cost of $82 per unit.
All other cost categories remain the same. Subcontractor B requires a 35-day lead-time with a total production cost of $88 per unit.
All other cost categories remain the same.
Quality standards can be met by each of the subcontractors.
As consultants and industry experts, your assignment is to prepare a written recommendation to the president
and CEO on how to meet the production and sales requirement of 30,000 units per month for the first quarter while preserving the
good reputation of the company and minimizing losses due to the faulty sales forecast.
1. Please address the needs of the customer through the data provided in the scenario.
2. Discuss how you determined the needs of the customer.
3. How subcontractors A and subcontractor B meet the needs of the customer.
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